16/11/2015

After receiving approval, the two giants and their subsidiaries will began to restructure their debts, and a formal announcement about the consolidation can be expected early next year, the source said.

Many observers have reckoned that both companies will merge their container shipping businesses first, due to the economies of scale which can be created in the sector.

The source however, said the two state-owned conglomerates might start merging their different segments, including bulker, tanker, boxship and ports all at the same time, through Beijing will still have the final say.

“There are many difficulties to be resolved,” the source said.

The listed units of Cosco and CSG, including China Cosco Holdings and China Shipping Development, collectively suspended the trading of their shares in August shortly after ship.sh, a Shanghai-based shipping website, disclosed that the two conglomerates had jointly set up working group to iron out a draft merger plan.

On September 16, the listed subsidiaries extended their stock trading suspensions and noted that their parent groups were planning significant events that involved asset reorganization. Late that some day, a person close to the State-owned Assets Supervision and Administration Commission of the State Council told local media that the draft plan had been completed and was under review by Beijing.

Shanghai-and Hong Kong-listed China Cosco and other listed units are now expected to lift trading halts on their shares before November 16, accordingly to earlier exchange filings. But the source said there will likely be more extensions.

These units held shareholder meetings on Monday to discuss “issues related to the training halts on their stocks”, but did not disclose when their shares will begin trading again.

Guo Huawei, board secretary of China Cosco told shareholders during the meeting that “the reorganization plan is still under study.”
The Shanghai Stock Exchange last Friday released an exposure involved in asset organizations.

In the draft, the bourse proposed that the trading halt on a company’s stocks for such purposes shall not exceed five months under normal circumstances.

Formal consolidation announcement expected early-2016

Keeping you updated,

 

Michael Tisch

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